FLCT to acquire prime suburban office building in Victoria for A$60.25m

Frasers Logistics & Commercial Trust (FLCT) plans to acquire a fully-leased freehold suburban commercial property in Victoria, Australia for A$60.25 million (about S$58.4 million).

In a filing to the Singapore bourse on Thursday, FLCT said that the purchase price took into consideration an independent valuation of A$60.25 million conducted by consultancy CIVAS (VIC) as at April, 30, 2022. The deal is slated for completion on May 20.

Located at Blackburn Road, Mount Waverley, the building sits in the heart of the City of Monash. Completed in November 2016, the five-storey, A Grade suburban office building has a total net lettable area of 7,297 square metres (sq m) comprising two retail tenancies on the ground level and four upper levels of office space. It is fully leased to nine tenants with a weighted average lease expiry (WALE) of about five years, as at March 31, 2022.

FLCT said the total cost of the building will work out to A$65 million, including stamp duty as well as other fees and expenses linked to the deal.

The acquisition will be funded from the divestment proceeds of Cross Street Exchange in Singapore. In January, FLCT announced the divestment of its remaining leasehold interest in the mixed-use commercial property for S$810.8 million.

Robert Wallace, chief executive officer of the REIT’s manager, said: “With the property being 100 per cent leased to reputable tenants in diverse industries, the acquisition is expected to further enhance FLCT’s quality tenant mix and portfolio metrics, while providing unitholders with a stable income stream.”

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The property will be FLCT’s fourth commercial asset Down Under, boosting its exposure to the Australian market to 51.8 per cent of its total portfolio value, from 51.3 per cent previously. Post acquisition, its portfolio occupancy rate will edge up from 96.1 per cent to 96.2 per cent, with a WALE of 4.6 years.

FLCT highlighted that Melbourne’s south-eastern office market recorded a positive net absorption of 1,684 sq m in Q1 2022, underpinned by positive relocation activity from large tenants. It said: “Occupier demand is expected to be positive with recovery post-Covid-19 in the Melbourne south-eastern office market. Thus, the manager is of the view that good quality buildings continue to be the preferred products in this market as flight to quality opportunities arise.”

Units in FLCT closed at S$1.35 on Thursday, down one cent or 0.74 per cent.